Conti, Schaeffler to form task force on powertrain

Bettina Mayer Automotive News Europe

Munich, Germany -- Continental and the Schaeffler Group's first area of cooperation will be in powertrains.

"Discussions on strategic partnerships have already started," Continental Deputy CEO Alan Hippe said during a call with analysts August 27.

He confirmed that early discussions between the two sides have focused on powertrains.

A Continental source told Automotive News Europe that the companies want those discussions to lead to the formation of a task force that will define future projects in which the two sides can cooperate.

The task force is one of the things the source expects Schaeffler CEO Jürgen Geißinger and new Continental CEO Karl-Thomas Neumann to talk about when they meet at an undisclosed location in Germany this week.

Task force members, who still need to be chosen, should start discussions in the middle of the month, the source said.

That is when an agreement that gives Schaeffler a 49.99 percent stake in Continental is expected to be finalised.

The deal

Key points in the agreement reached August 21

• Schaeffler will buy a strategic stake in Continental of up to 49.99% for €75 a share
• Shareholders have until September 16 to accept the offer
• Schaeffler will pay up to €522 million to cover costs that come from the change in control
• Schaeffler will pay up to €522 million to cover costs that come from the change in control
• Schaeffler will keep its holding in Continental below 50% for at least four years
• Schaeffler will support Continental's current strategy and to leave its brand appearance and organizational structure untouched
• Former German Chancellor Gerhard Schröder will make sure the terms of the deal are met

Few details have emerged on which projects the two sides will cooperate. What both sides have said is that Schaeffler's mechanical expertise complements the electronic know-how at Continental.

One candidate is a common-rail diesel system that Continental is working on for a Volkswagen 1.6-litre engine. VW wants the engine ready by the second half of 2009 so it can be offered in the next-generation Polo small-segment car.

VW has confirmed that VW group CEO Martin Winterkorn is not sure whether Continental, which inherited the project from Siemens VDO Automotive when it bought the company at the end of 2007, can meet the deadline.

Winterkorn has warned that if Continental can't get the work done in time he will give the project to Conti rival Robert Bosch.

That is not something Continental and Schaeffler want. Based on sales, the Volkswagen group is the top customer for both suppliers.

Complicating Continental's cooperation with Schaeffler on powertrain projects is Continental's restructuring of the division,

In March, Neumann took over the division, which last year lost €73.5 million. He intends to cut jobs and balance the division's production in high- and low-cost countries.

From Automotive News Europe (A Crain publication)